12 April 2012

CRE: Mixed response to global programmes database plan suggests slow progress

Most insurers and brokers in the European corporate insurance market are publicly supporting the initiative to create a global compliance database to help clarify and simplify cross-border coverage for risk and insurance managers.

At the end of February, Airmic reported a ‘healthy response’ to the Request for Proposal it issued along with the London International Insurance Brokers Association (LIIBA) and FERMA that invited potential service providers to show an interest in delivering a Database of International Insurance Requirements.

But there is still a high level of scepticism in the market about the practicality of this effort, and one leading European and international insurer at least has recently told Commercial Risk Europe that it has serious doubts about the validity of the idea.

Christian Hinsch, CEO of HDI-Gerling, told CRE that the idea is clearly appealing to customers and would be great if it could be made to happen. But he warned that it is an ‘illusion’ to believe that a database can be built to monitor the regulatory situation in any country where a policy is relevant on a ‘real time basis’ unless there is one master regulator, which currently does not exist.

One suspects that most insurers and brokers in the corporate insurance market agree with Mr Hinsch but so far have not been brave enough to voice such concerns, publicly at least. Despite market doubts about the plan, Airmic is determined at least to give it a try.

It said at the end of February that the planned database would contain details of regulations on a territory-by-territory basis, making it easier for risk carriers, their clients and brokers to ensure that insurance programmes comply in every territory where cover is provided. The UK risk managers’ association stressed that although it is leading the initiative, kicked off publicly at CRE’s seminar on global programmes last February in London, the database will be a market-owned facility. No date has been set for completion of the project, but Airmic said that it is anticipated that work will continue throughout next year.

Mr Hinsch of HDI-Gerling said that its strategy is to find a multinational programme solution for each customer that suits their individual needs. In this respect, the job of the insurer is the same as an auditor or tax advisor who also needs to find the right solution, he said.

“It is an illusion to imagine that there can be a 100 per cent secure solution in this area. You can come close to zero risk but it has a cost attached to it and it depends whether the customer is willing and able to pay that cost. If the customer says that he or she is willing to pay the extra then fine it can be done, but no one can guarantee 100 per cent no risk in this area, if only because in the life of a policy the regulation will change”, Mr Hinsch told CRE. Mr Hinsch added that a single real time database is not possible unless there is one master global regulator.

José Ribeiro, outgoing Director, International Markets, at Lloyd’s did not seem overly enthusiastic about a market initiative somehow to formalise the process, and believes that the brokers are currently doing a decent job and should continue to do so. He said: “Even without the new technology [the initiative] we can deliver global programmes because the best way to deliver global programmes is via brokers".

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